Underdog Fantasy Fined $17.5 Million by NYSGC Over Licensing Dispute

The New York State Gaming Commission (NYSGC) has penalized Underdog Fantasy $17.5 million for operating without a current temporary fantasy sports license. Since December 22, 2022, the business has been holding fantasy sports competitions in New York under a temporary license granted by Synkt, which is currently controlled by Underdog. On March 14, however, the NYSGC came to the conclusion that Underdog lacked the necessary authority to run specific events in the state.

The commission calculated the fine based on Underdog’s revenue generated in New York. Following the ruling, Underdog ceased its operations in the state on the same day. Despite the significant penalty, Underdog maintained its stance that it acted in good faith, stating in a company email, “The number is based on the amount of revenue Underdog’s popular games generated in New York.”

Payment Plan and Cooperation

Under the settlement, Underdog will make 12 payments from April 1, 2025, to January 1, 2028, to fulfill its financial obligations. Importantly, the NYSGC acknowledged the company’s cooperation during the investigation. The commission also noted that Underdog could apply for a permanent fantasy sports or other gambling license in the future.

Additionally, Synkt must submit tax forms to the NYSGC and pay any owed taxes. Failure to comply could impact any future licensing applications for either entity.

Underdog publicly disagreed with the NYSGC’s decision, emphasizing the state-specific nature of the licensing issue. Nicholas Green, Underdog’s general counsel, remarked, “It’s a unique, temporary licence issue specific only to New York and not related to any specific game format we offer.”

He further explained, “Any fantasy game created after 2015, no matter the format, is not permitted under the commission’s interpretation of what games a temporary permit holder, like Underdog, can and cannot offer. The high fine amount speaks to the popularity of our games, as the settlement was calculated based on our revenue in New York.”

Underdog has since withdrawn all its contests in New York, including its “Draft” and “Pick’em” offerings. However, the company has already applied for a permanent fantasy sports license, which remains under review.

While the fine is significant, the cooperation and settlement terms suggest that Underdog’s future licensing prospects in New York remain intact. The incident serves as a reminder of the regulatory complexities companies face in the expanding fantasy sports and gambling market.